Four Things That Can Go Wrong After Pre-Approval

There are four things that could potentially derail your mortgage loan even after you’ve been pre-approved by a lender.

1) You have insufficient documentation
2) You don’t have enough funds for your closing costs
3) You made a large purchase, or purchases and have taken on additional debt
since pre-approval
4) Your income or employment situation has changed

It is very essential that you avoid all of these types of issues at all cost so you are more likely to receive a “clear to close” green light from the underwriter.

1. You have insufficient documentation.

Mortgage lenders request a variety of financial documents when approving borrowers for home loans. These include Notice of Assessment (NOA's), bank statements, pay stubs and a current employment letter stating your type of position with your employer, start date, guaranteed hours per week, pay rate per hour or total annual income.

Most mortgage lenders would issue a pre-approval based on partial documentation, and usually do not require all of the necessary documents up front during the pre-approval stage. Complete documentation is required during the final approval stage, which occurs after you make an offer on a property and get the offer accepted.

In the best-case scenario, this will only lead to a slight delay in the mortgage approval process. In the worst-case scenario, it could cause you to be denied a mortgage due to insufficient documentation — even after you’ve been pre-approved for a loan.

You can reduce the chance of document-related problems by rounding up your documents way in advance before the lenders ask for it. The simplest and best method to do this is by staying in close contact with your broker before and during the underwriting process.

For a full detailed explanation of the remaining three reasons, please message me at: aibhahe@gmail.com